U.S. Long-Term Yields Soar Again...10-Year Treasury Hits New High in Four Days

10-Year Treasury Yield Hits 5.349% Intraday

The yield on the 10-year U.S. Treasury note surged again on the 5th (local time), hitting its highest level in over 20 years. This rise is attributed to persistent concerns over additional Federal Reserve (Fed) rate hikes amid robust U.S. economic growth, expanded investment in artificial intelligence (AI) infrastructure, and continued high inflationary pressures.

Wall Street, Manhattan, New York. New York (USA) – Special Correspondent Yoonju Hwang

According to Bloomberg, the yield on the 10-year U.S. Treasury climbed as high as 5.349% during intraday trading, surpassing the previous record of 5.344% set on October 1 and reaching its highest level since 2002.

The 30-year Treasury yield also jumped more than 7 basis points (1bp = 0.01 percentage points) to reach 5.70%. Short-term yields rose by about 2–4 basis points as well.

U.S. Treasury yields have been steadily rising since mid-August. The ongoing solid U.S. economic growth, primarily driven by increased investment in AI infrastructure, alongside persistent inflationary pressures, has stoked worries that the Fed may implement further rate hikes, fueling a selloff in longer-term bonds.

On the same day, the U.S. September services sector indicator also added to the strain on the bond market. The Institute for Supply Management’s (ISM) Services Purchasing Managers’ Index (PMI) fell to 54.9 from the previous month, signalling a slowdown in expansion. However, the price index, which reflects companies’ cost burdens, climbed to 74.0, reaching its highest level since July 2022.

BMO Capital Markets strategist Bayle Hartman commented on the indicator, saying, “It shows that inflationary pressures are increasing and nominal growth remains strong,” and added, “The factors that have been driving recent weeks of bond market weakness have strengthened again.”

The market is increasingly weighing the possibility of further rises in long-term yields. Earl Davis, head of fixed income at BMO Asset Management, said in an interview with Bloomberg TV that a rise in the 30-year U.S. Treasury yield above 6% is “inevitable.”

He explained that current bond market volatility is creating a vicious cycle that drives yields even higher and suggested that the 6% level could be breached as early as this month. The 30-year yield has not exceeded 6% since 2000.

Expectations remain for additional tightening by the Federal Reserve. Interest rate swaps markets are currently pricing in about a 25% chance that the Fed will raise the benchmark rate at this month’s Federal Open Market Committee (FOMC) meeting, and are fully pricing in one 0.25 percentage point hike by the December meeting.

This week’s scheduled U.S. long-term Treasury auctions are also a key variable. The U.S. Treasury Department will begin with an auction of USD 58.0 billion in 3-year notes on October 6 and proceed with additional auctions throughout the week. According to Bloomberg, the strength of investor demand for the 10-year and 30-year Treasury notes will be a crucial test for the future direction of long-term yields.

This content was produced with the assistance of AI translation services.